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2017

I interviewed Erwin Scholther who discussed Supply Chain Decision Making.

 

 

 

 

 

 

Please provide a brief background of yourself

 

Dear Dustin, Firstly I would like to thank you for reaching out ,I am glad that I can be apart of the people that had a chance to speak with you ,to be on the list with huge names of the industry  I have a still… ,from my point of view short career of 7 years in procurement, 7 years but in a company that gave me an opportunity to evolvefreely, when I was 21 years old I have send my CV to this company in my home town and was contacted for interview ,originally applied for IT job I have arrived by chance to Purchasing department,(as 99% of us ), well for me as a young professional was a huge chance I did not arrive to a strict department , I have arrived to a department that was in full evolution and I had a huge chance of learning and experiencing,I have understood the consequences of my mistakes and actions the hard way , In a way I was thrown in deep water this is why I consider this 7 years of experience ,It is 7 years and not 1 year 7 times , I have evolved with this company and I was in many projects and had the chance to experiment a lot, I am currently purchasing responsible, trainer and learner ,a self-learner ,I had to overcome that I only had experience at one company ,we as purchasers are researchers now and we have to learn constantly, also I had a chance to work with people that I always had to learn from and I am of opinion that we have to make benchmarking with our suppliers too , we deal with various fields, but they are experienced in their ones so we have to take advantage of this , Also I have recently started the project of training others, I am of opinion that we have to take and give back to the world, this is why I will make a lot of Pro-bono trainings My great goal Is to change procurement, or change the BUSINESS through procurement , lot of companies have huge potential, we have to establish clear lines and to underline the importance of procurement and supply chain in every company, we have to have a seat at the TABLE especially in this financially rough times . My main field are now raw materials, packing and chemicals, but thru the years I have managed all fields including service, technical purchases and procedures. I am fortunate that I had a chance that not all of us have.

 

What is your experience with supply chain decision making?

 

Considering my background I had a lot to do with decision making , and I have struggled to find the golden path of decision-making , there were times that decisions were taken only by people above me and there were times that decisions were taken together or alone, my company Is putting accent on the personal experience in decision making , we are all responsible for our decisions ,normal within some limits, limits that again we have established together with top management based on our experience ,

 

Why is this important to understand?

 

We take decisions all the time and we have to take the good ones  , all of our decisions have consequences positive -negative and maybe both , we have to take tough decisions daily , hourly some days (in procurement), all of our decisions have to be objective and have to be transparent , whenever I take a decisions I always try to see things from a distance , I always check my decisions by putting myself instead of a stranger or auditor and ask myself :is this decision the right one , can be traceable is it objective and if it was another purchaser ,the decision would be the same ? Sometimes it is tough to not be absorbed by routine, each PO is a decision, we decide the supplier and we negotiate the terms but at the end we decide if we accept them or not ,so negotiations is in the end a decision too ,but it is important to understand and always take the right decision for our company and you have to be able to explain your decision objectively even if you areawaken in the middle of the night, no doubt should be left, every option should be explored.

 

How can it be done more effectively?

 

Well I stated before, effective in my opinion is to establish some ground rules (call them approval steps, most commonly used and values) and try to make as few decisions as possible, I always remember Mark Zuckerberg and why is he always wearing the same T-shirt  ...it is one decision less to take each day, little stress eliminated.

One of the important things we have to understand itsthat we all have our limits and we can find ways to evade certain decisions that may affect us but are not our responsibility, for example in supplier negotiations we all have our limits and as I use to say 80 % ofnegotiations are made before the meeting , 80 % of decisions are taken before you enter the meeting room , so why not prepare yourself , I consider a great Idea the supplier negotiation card that I think is perfect for low and mid management, Is a card that you fill with the content you need or want to negotiate , you establish the sums and conditions you want to negotiate and you can set targets and marginsthat you need to respect, before meeting you can present this to your superior and they can modify /comment and approve ,so this way you can negotiate the terms between the lines and  your reasonabilityis limited, it is very stressful to make decisions that are with huge responsibility and also maybe you do not have clearance to make them , It is a great tool I recommend . For me where applicable I use Benjamin Franklyn’smethod, keep it simple keep it lean and objective I write pros and cons and in the end, I have a clear result. Also we take more complicated decisions , write them down, priorities and try to SEE the results , because decisions should be simple to take and should be easy for others to understand, make It lean if you do not have a clear decisions, ask for further info, try to reach the point everything is clear and take decisions only when you have a clear view or other approval.This I what I teach in my trainings too, decisions should be MADE simple to take.

 

 

 

About Erwin Scholther

 

 

 

 

 

 

Erwin Scholther

 

Procurement professional | Procurement trainer |Future speaker | Constant learner

 

LinkedIn Profile

I interviewed Axel Herzhauser who discussed Innovation and Changes in Supply Chain.

 

 

 

 

 

 

Can you first provide a brief background of yourself?

 

Yeah, thank you, Dustin. My name is Axel Herzhauser. I've been in the supply chain industry for close to 20 years. Actually, I started my career back in 2008. Prior to that I was [inaudible 0:00:25] educated also in Germany and for a short while also in the United States. I started my career with a company called TransAm which is [inaudible 0:00:33] Group back in Germany around over land transportation and also contract logistics. Moved then into [inaudible 0:00:42], worked for Exel. Nowadays that would be DHL. I was there in the trade lane development, more on air freight and ocean freight, to be called Forward Logistics, moved by a German called Logwin into the Asian fashion consumer retail business to CVA in Hong Kong where I was overlooking the markets for Hong Kong, South China, and Taiwan. And later, I moved into Singapore, worked for companies like Ingram Micro where I heading their 3PL supply chain business. And in my latest role, also with Teleplan International. Teleplan is a reverse logistics after-market service provider, a bit of a niche product and a niche industry in the supply chain that we’ll be touching on a bit later on here.

 

My first question is can you talk about reverse logistics and the circular economy?

 

Yes, I sure can. And that's certainly a topic that I spend quite a bit of my time on at the moment or I have over the last few years. Reverse logistics is certainly a piece of the overall end-to-end supply chain which a lot of companies very often ignore. So when you go and google basically the supply chain, the reverse piece of very often neglected. Sometimes it's not mentioned. But in my point of view, it's a piece of the supply chain that is of extreme importance.

 

What we do at Teleplan now is basically look into products, basically, that have been sold, that have been in the consumer's hand, know what happens, basically, when these products reach the end of their lifecycle overall.

 

It's a very, very big topic overall where basically I think 10, 20 years back, companies were talking about recycling. I think it was a very big topic. But now it's really about supply chain sustainability of how is the circular economy taking this forward. Given a lot of the environmental regulations in, I would say, more mature markets like North America and Central and Western Europe, things have been set up by regulators, by governments, whereas in Asia, you only see this in a few markets. You see, unfortunately, I think, in Asia nowadays, still more than 20% of any products, basically, that are at the end of the lifecycle that go into landfill. That's an extremely high number whereas my understanding is that in Europe and North America, that is less than 4%.

 

There are great opportunities in this area overall simply because we have Asia basically still being the manufacturing hub of the world. We're looking into markets like China and India and also partly Southeast Asia. I think shortages of raw materials are certainly a challenge that we're facing right now.

 

As part of the circular economy, I think there should be a concept on how end-of-lifecycle products will be broken down into its raw materials for the actual reuse of raw materials overall. So what this means is, if you look into electronics, for example, Dustin, you want to look into harvesting precious metals, reusing them instead of basically putting them in the landfill. The actually reuse of precious metals — and we're talking here gold, silver. We're talking copper, basically. Everything that's needed in electronic manufacturing can be won out of this process of reverse logistics rather than basically looking into new sources overall.

 

It has a positive impact on the cost side because I think it's just simply a lot cheaper using harvested products that have been reused before. And most importantly, I think it's also a very positive impact on the environment which Asia is becoming more and more conscious about.

 

What about recent developments around blockchain?

 

Different topic but also an extremely exciting topic, I would say. So I think we've been reading a lot about blockchain, and the world has seen a lot about bitcoin. I don't want to talk about bitcoin in general, but if we look at what's happening around blockchain, I think this is going to, in my point of view, revolutionize the supply chain industry, not only supply chain by also, I would say, several other industries and markets.

 

Blockchain technology basically allows us now to replace middle men by implementing peer-to-peer systems. It increases processing speed and reduces cost overall.

 

What does that mean? It creates an information flow that is faster in the supply chain nowadays, and I think it also means that a number of players in the industry would probably have to rethink and reposition themselves as they're right now currently just a middle man. I'm looking into companies that are in freight forwarding, and I'm not saying that these companies will not be needed anymore. But these companies will have to adapt and will basically have to rethink their processes on where they're going to play within that supply chain.

 

A lot of the work that's being done there is basically very administrative, and I think there is documentation as one example. There is still nowadays in the supply chain, there is way too much paper that is being used and handled. So the digitalization of the supply chain has probably not enhanced as much as it should have and probably also as much as it has in other industries, maybe in finance, banking, and insurance.

 

We deal with a lot of paper that's very labor intensive, which makes the supply chain overall a rather expensive process. Blockchain technology is something that can really help to enhance this, standardize a certain process, create, basically, a data with very high integrity that can be basically allow us to move the digitalization of the supply chain a lot faster overall.

 

Do you have any final recommendations on this topic?

 

The final recommendation in my point of view is basically to get up to speed around these recent developments. We hear a lot about factors that are changing, the overall end-to-end supply chain. I talked about reverse logistics at the very beginning. I think it's a topic that I think a lot of companies and not only logistics providers, supply chain providers, but also many factors, retailers, it's a topic that everybody needs to look into.

 

When it comes to blockchain overall, I think it's certainly a topic that is being discussed at this point. If you go to forums, if you go to events, I think it's a topic that's very high on the agenda. But I think there is only very few people who actually really understand what blockchain is all about and what kind of impact blockchain is going to have on business nowadays and how it's going to transform the business on each and every company. We see more and more companies coming up basically creating platforms for companies as a solution overall. These companies, in my point of view, will have the opportunity to disrupt the supply chain industry, to some extent. And I think my recommendation would be really get up to speed, understand what this is about, and most importantly, understand what this actually means for your business and how, in your business, you can add value in the overall process. And I think there is room for everybody, but I think neglecting the topic is something which is not very wise to do.

 

Thanks, for sharing today, Axel.

 

Thank you very much, Dustin. Much appreciated.

 

 

About Axel Herzhauser

 

 

 

 

 

 

Axel Herzhauser

 

VP Commercial - Asia Pacific at Teleplan International

 

LinkedIn Profile

I interviewed Nick Vyas who discussed Disruptive Technology and its Impact on Human Capital.

 

 

 

 

 

 

Today we're speaking with Nick Vyas who is the executive director of the Center for Global Supply Chain management as well as an academic director for the Masters of Science in Global Supply Chain Management at USC Marshall School of Business. So, Nick, thanks for speaking with us today. Is there anything else you wanted to provide as an introduction to yourself?

 

I think that's a good start, Dustin. I look forward to speaking with you.

 

Great. My first question is can you talk about some of the disruptive technology trends that are taking place?

 

I think what we're seeing... And before I even actually jump into the disruptive technology trend, I think there is a parallel that I want to draw. And the parallel of that is how the globalization is going to continue to be shaped and how that's going to impact the supply chain. And I want to kind of then talk about the disruptive technology and how those two things are really emerging in front of us.

 

So let me actually go over the globalization quickly. As you know, election in the US, the Brexit, and many of the Western European countries, we're seeing that there has been a question asked about is globalization good or not in the long run. And I think what we're seeing is that there is some conversation about challenging what has happened over the last 30, 35 years.

 

So what we see from the supply chain standpoint, from the global supply chain standpoint, the rising, consuming class that we see in Asia, the middle class and their spending power between the countries, and when you look at China and India and many other Asian countries, that is also true on the Latin American side, we see that market playing a tremendous role in the space of global supply chain management.

 

We believe this emerging market growth will help shape the future trends of how the global supply chain will be shaped in the next 30, 40, 50 years.

 

Along with that, another trend that we see is a rise of mega cities. In just 40 years, we've gone from 25 to 60 mega cities, and we think that the trend will continue. We expecting from 60 to 72 by 2025. What that means basically, that a quarter-plus wealth is concentrated in the mega cities. And how that's going to shape the global supply chain management.

 

So between those two, globalization trend that I just talked about, the middle class, and the mega cities, we really think the future of global supply chain will be pivoted from that trend into what the technology is going to be shaped up.

 

So now, actually going into the disruptive of technology, because of this globalization trend that we talked about, the rising middle class, they want the things that was only open to the advanced economy. They want to consume. They want to procure things that were once only opened to certain country and certain class of citizens. Now they want this. And this is hundreds of millions of people. How does that demand get fulfilled in a future economy?

 

I think this is the antecedent to how the disruptive technology is getting shaped. So what we look at as disruptive technology, I think what we're seeing, the major technology trend, is truly, in terms of five different categories... Some might talk about the drone, autonomous [inaudible 0:04:30], 3D printing, and machine learning, and last but not least, the augmented AI.

 

Can you talk about the impact on human capital?

 

Certainly. As we looked at some of these key disruptive technologies, I think one of the phenomenal things we look at is evolution and acceleration in growth of this technology. This is almost an exponential curve that has kicked in. So if you go back and actually measure the rate of change of a technology from 1400 all the way to now, and if you can forecast this to 2050, what we see is a steep curve going up at a very fast rate. And that's why we actually label this as a disruptive technology. We can start from drone-based delivery to AGBs to 3D printing, machine learning, AI. All these things are so disruptive, in a way, for hundreds of years that we have managed supply chain, the way we manage the trade.

 

So what we see that the human capital that is used to doing things one way, more or less —30, 40, 50, or even hundreds of years — is being challenged the way the technology is being shaped.

 

So point in case. You look at the reflection of that, what happened in the election in the United States, the jobs for decades in mining and traditional manufacturing has been replaced by automated robotic applications. So just imagine that there is a class of citizens in a country that, when this disruptive force came in and disrupted the industry, it actually created a major impact. So I no longer need a person who does spot welding. Rather I can now have a robotic application of a welding that actually does the welding consistently at [inaudible 0:07:15] rate and eliminated the jobs that were once guaranteed to middle-income families. So that's just an example that we see that there is a tremendous disruption in terms of how the future jobs will be impacted and how that impacts on human capital.

 

So this is not to say that this will completely wipe out the future jobs. The question is the human capital needs to be managed very differently than how we have managed human capital in the past.

 

Thanks, Nick, for sharing today on disruptive technology and its impact on human capital.

 

You're very welcome. Just to summarize, I feel that there are plenty of future jobs in this new space and a lot of opportunities. In fact, the Wall Street article just last week points out that there are millions of jobs but they'll be created in these disruptive forces. And how do we really build the human capital? How does private and public entities work together in shaping the new curriculum in universities and really help promote the future skills? And one of the things, Dustin, as you know, running a center and Masters of Science of Global Supply Chain Management, we try to dynamically integrate this in the curriculum to talk about these things and bring shape the future leadership and our students to really participate and partake in this journey.

 

Thanks, Nick. I hope we can stay in touch and have further interviews in the future.

 

Look forward to it, as always. Always nice to connect with you.

 

Thanks.

 

 

About Nick Vyas

 

 

 

 

Nick Vyas

 

Executive Director - Center for Global Supply Chain Management (CGSCM) & Academic Director - MS in GSCM at USC Marshall

 

LinkedIn Profile

I interviewed Christoph Szakowski who discussed Changing the way you work in Logistics Emerging Markets.

 

 

 

 

 

 

Today's topic is changing the way you work in logistics, emerging markets. Before we start, can you provide an introduction and your experience in logistics, emerging markets?

 

Thank you, Dustin. I'm Christoph Szakowski, and it's my pleasure. I'm managing partner of LogCon East / LogEasy. During my international career in logistics and transportation, for the first 10 professional years or so, I gained leadership experience in large logistics organizations like DB Schenker, Logwin, [0:00:54] in Western Europe in the German-speaking world. So I know how to provide logistic solutions, expand client relations, market share, and manage people in locations which are very well developed in terms of standards, infrastructure, and maturity of business.

 

After that, for a period of approximately eight years, I've been dealing directly in the world of emerging markets in logistics. So again, in some cases as manager for the logistics providers, in other cases as consultant and interning manager. I gained experience in countries like Russia, China, Turkey, and Kazakhstan. All of them ranked in top 15 in the Agility Logistics Emerging Market Index 2017. So something I will be talking about later in this interview.

 

What are logistics emerging markets, and what is so special about them?

 

Let's start with considering what is said in the agility logistics market index I mentioned previously. 50 countries are measured there on the combination of their market size and how attractive the markets are, also, on the business climate, the transport infrastructure, and the efficiency of customs and borders. Also included there is a trade lane analysis of major trade lanes linking emerging with developed markets. In this index, you can find also the opinion of logistics professionals. So all in all, you count them there to a ranking with China, India, and United Arab Emirates on the top of the list and mostly African countries besides of Nigeria, which is in the middle, occupying the lowest ranks.

 

What is so special about these markets? Of course, there really are huge differences within the whole group. As the leaders [inaudible 0:03:31] of the lowest-ranked country. But there are some common observations, at least for the overall Asian markets, which I know well.

 

The first point is the uncertainty and changing nature of business regulations, which you are confronted with as decision maker, as a manager, as an entrepreneur. But this disadvantage needs to be considered together with a huge growth perspective in these markets.

 

Once you are good at entrenchment [inaudible 0:04:16]... I just want to continue. And once you do that, you change management and you know your company and your people are adaptive to deal with less orders and regulations and [inaudible 0:04:33] productivity, you might be the winner.

 

The reason is actually the second point about logistics emerging markets, which is special. And this is the lack of [inaudible 0:04:47] or relative low number of third-party logistics providers. So the result is a good potential for outsource transportation services and integrated logistics. According to some research and our experience — for example, Russia — there is high outsourcing potential for third-party logistics providers in over-land transportation, domestic-land transportation, warehousing, custom services, and freight forwarding. So that is the second point, which is special.

 

And also, I would like to mention the third point which is special for the logistics emerging markets. That is the relatively low amount of highly-qualified specialists and managers who are able to work successfully in logistics provider organizations. I made this experience in a managing career for a 3PL provider in Russia and other functions for China, Kazakhstan, Turkey as well. So worldwide, we talk about supply chain talent shortage or even about the supply chain talent crisis. But what is special in the emerging markets is that there, in many cases, has not been as special logistics education, logistics-focused education. And also, they graduate from management schools. They rather preferred other business sectors from the beginning. So there is a fight for real talent and if it is possible to find the right candidates, train and keep them motivated once you know the approaches and possess a good network. So those are the special points about logistics emerging markets.

 

What are the three key issues that you should consider to change to be successful in emerging markets?

 

You could be actually surprised how important your attitude is in this aspect. So the first thing is to change the way of how you think about emerging markets, especially coming from more developed economies, maybe having worked a very successful career path and believing you just need to transfer one to one your way of managing into the emerging markets. But simply this is not working.

 

For successful operations, in such a competitive business like logistics, you need people who understand and respect the culture, the language, and the mentality of the emerging markets. So you need to keep your management values on the one side, but you need also to dive deep into the different characteristics of the markets on the other side. This helps you to be a successful leader and to receive authority right from the start. I heard once that you need first to understand before you are understood. So this is a good recommendation.

 

Secondly, you need to change your perspective on business planning whereas any [inaudible 0:08:35] management systems, you are expecting your managers and senior specialists to play a very active role in the planning, preparing, proactive communication, the needs, steering the team or department independently. This might be different in emerging markets. So people need to be taught and incentivized to start in such a way. The reason is that naturally, they might be a little bit reluctant to take on the full responsibility and make clear decisions. So those points, they might expect from you as the big boss.

 

To give you an example, a logistics provider is establishing an office in emerging markets and [inaudible 0:09:30] from the branch manager. [Inaudible 0:09:39] expect the local specialist to come with a business plan. And this business plan should consist of a market, trade lane analysis, clients, sales plan, surveyors, service products overview, all of the tool and organizational and financial plan. But you [inaudible 0:10:02] experienced person and he [inaudible 0:10:08] give some calls to suppliers and clients he knows. So he or she would continue in such a way before you stop this manager suggesting that to organize a little bit his ideas and suggesting how to develop his department with clients and achieve targets in a more systematic way.

 

And the third point, you need to change working in logistics emerging markets is something I would call applying a management style, a special management style, with quite good portion of tolerance for the approach but high commitment to the goals. As mentioned to you earlier, you have the infrastructure issues, [inaudible 0:11:00] price sensitivity, market instabilities, and sometimes, what is also hard is the first specific ship and logistics provider constellation, which is hard to predict as you don't know exactly the pattern of decision making.

 

So this all doesn't allow you to define exactly your business development steps. But once your team, your people, are committed to the goals, they will try out different solutions to achieve them. Using, for example, Unix set of couriers, suppliers, customs agents, and so on, and different modalities in the transportation chain. And this is them, the exact [inaudible 0:11:53] for the client but maybe never heard of in your corporate strategy.

 

Should the people management also be changed by companies that are dealing in logistics in emerging markets?

 

If we consider that managing people has something to do, in general, with the way our objectives are set, with the way decisions are made, with the coordination achieved, and finally, how people are motivated. So I would also make a distinction between a traditional and alternative model, and then ask what is more to be applied. You need to make a choice for your people management style in emerging markets. Definitely, you need to do so.

 

So are you going for a system when the boss knows best and makes the decisions or are you, for example, expecting in countries like Russia or China that that decision is an aggregation of inputs from your team members? Are you going to motivate people there by paying for performance, for example, instead of underlining the social drivers of motivation, which is giving people a purpose, a sense of work? This is the tendency, of course, but from my experience, in several projects [inaudible 0:13:33], I recommend to rather to use the traditional people management option with rather top-down decisionmaking and material motivation in emerging markets.

 

But, again, the key in this is something we do in several seminars, projects, trainings, is to choose the balance between the different drivers of motivation. So definitely in the current situation of supply chain talent shortages, you need to take the right decision for people management, as this gives you a strategic advantage, whether you are going to have operations in Southeast Asia or Central Asia, CIS countries, or West Africa.

 

Do you have any final recommendations?

 

I would recommend logistics companies to rely on expert opinion and involvement, helping them to guide through the emerging markets. Sometimes we see that the corporate strategies — the guidelines, processes — which have been constructed decades ago for the core business markets cannot be successfully implemented in emerging markets. So for strategy and operational consulting or just for finding the right stuff, it is very often the key to involve specialized advisors with extensive experience in those markets.

 

Thanks for sharing today, Christoph.

 

It's my pleasure. Thank you.

 

 

 

About Christoph Szakowski

 

 

 

 

Christoph Szakowski

 

COO / Logistics /SCM/General and Interim Manager in 20+companies/DACH, CEE,CIS, Asia, Emerging Markets

 

LinkedIn Profile

I interviewed David Leifsson who discussed "Change the way you work" - 3PL vs eCommerce.

 

 

 

 

 

 

Today we're speaking with David Leifsson, and we're going to discuss Change the Way you Work — 3PL versus ecommerce. So, David, before we start, can you provide a brief background of yourself?

 

Yeah. Hi, Dustin. Thanks for the call. My name is David. I'm a logistics professional. I've been in the business about 20 years. My education background is a Masters in logistics and transportation, coming from Iceland, living in Gothenburg, Sweden. And for the past four years, I've been working in a 3PL company headed in Gothenburg, Sweden. That is something that I wanted to share because I have come across many things that traditional 3PL companies are doing and the customer is expecting something else. So I have been in that company as a site manager and more recently, I've been a senior logistics manager and often in sales. So that's a little bit about me.

 

Can you first talk about why you should change the way you work?

 

Yeah. What I came across is when I started in a 3PL company is they have been doing the same procedure for a very, very long time because probably customers that they've been working with have been doing the same things for a longer time period. But now in the recent years when ecommerce has been coming in stronger, the demand for change and to be flexible has increased and put high pressure on 3PL companies that really need to shape up and start to think about new ways of handling customers and be more flexible and not try to say how their customers should do it but the other way around, do as the customers tell them.

 

How is it done effectively?

 

My experience with ecommerce company, when getting into 3PL operation is basically like doing a deep dive interview with them and trying to understand the total process of their supply and how they really think and what they are expecting to deliver to the customers. Some of them really want to ship out things over the weekend when the traditional 3PL company is focused on closing at maybe four or five o'clock in the day. So there is a big gap, and the most effective way is to make a really good SOP to really understand what the customer does want or really wants. Sometimes they say something and mean the other thing. So it's investigations.

 

Can you share with us what you see as the trends for the future of ecommerce?

 

Yeah. I've been doing a little bit of writing down my thoughts about ecommerce. What I can see is that ecommerce is always focusing on trying to deliver as flexible to the customer as possible. So we are focusing on the last mile. And this is where a 3PL company comes into help for ecommerce, because what I think could be a solution for ecommerce companies is not to focus on one central warehouse. Instead, they should maybe be focusing on several so-called microhubs in larger cities. Actually, Amazon is doing this in the US, and I believe that this is something that is coming more and more over to Europe here. So by decentralizing the warehouse and the keeping them closer to the customers with maybe a limited SKU, then you could be more flexible in delivering to customers.

 

What I'm seeing is that the ecommerce, they will promise [inaudible 0:05:36] that you can order later and later, and that is something that has a huge impact on 3PL companies. They need to adjust to that fact that the customer presses the order button, and then they almost want the goods delivered straight away. So huge flexibility in the supply chain.

 

And often, what I can see is ecommerce is driven by entrepreneurs, and they have a lot of crazy ideas. So I think the ecommerce and the last mile is, as I would say, the last frontier of the logistics of the supply chain and has the most potential of creating new innovation and new ideas.

 

Then I believe that one thing that is driven because of the ecommerce is wanting to pay less and less for sending out orders. It will make 3PL companies focus more on solution as sending automated or a full-automated picking or warehousing and so on. So that's what I believe in brief.

 

Thanks for sharing today, David. Did we cover all the points you wanted to make today?

 

Yeah. I think so. Yeah.

 

Great. I look forward to staying in touch and having another interview in the future.

 

Yeah, that's good. Thank you. Thank you very much.

 

 

About David Leifsson

 

 

 

 

David Leifsson

 

Logistics consultant - Helping business to lower their total logistics cost - Let me cut your warehousing cost.

 

LinkedIn Profile

I interviewed Glenn Rosenholmer who discussed Complexity in the Supply Chain.

 

 

 

 

 

Today we're speaking with Glenn Rosenholmer who is a senior management consultant who is highly experienced, and he has practiced doing senior consulting doing many complex projects in the supply chain. Today's topic is also regarding complexity in the supply chain. So, Glenn, it's nice to speak with you today.

 

Thank you for being online with you again. I think it was more than a year, we had another of these sessions or catch ups about struggling with the challenges concerning supply chains. Thank you.

 

Sure. My first question is regarding training. How can you do training effectively when dealing with complexity in the supply chain?

 

First of all, it's been several years since we've became much more aware and used to techniques in terms of ERP systems and so on. At the time when we installed them, we spent not enough time for training and helping the people who are actually going to run the systems. So that's a bad start from the beginning, so to say. Also, it continues. So my tips to people who really want to make sure that they solve problems and not actually just for the time being, actually do it for the long term, should spend much, much more on live demos with real numbers and the people that are supposed to run the system later on and allow yourself to have a proper installation in terms of actually live training, I call it.

 

Thanks. What about agreements? What do you do when suppliers don't follow the agreements?

 

This is also something that crops up. You have to have your lessons learned. This is also a trick or tips or whatever, is to actually assign a contract manager that is in the organization from the start and not only concerning the legal notice and the legal rights. When you've done the contracts, I've seen too much of leaving it, being proud about it. But if you look at the numbers and compare it to what we actually agreed in the lawyer document, so to say, very often you will see there are reasons not okay, that it slipped away cost-wise.

 

Follow up and do it systematically, and be aware that the contracts need to be waterproof. And never back down, as I call it.

 

What about pricing and KPIs? How do you measure the right things and get the right prices?

 

When you have a complex situation, and you're very ambitious, there is a tendency that you pinpoint 50, 60, 70 KPIs to follow what's going on. But my experience is that it's not questioned during the lifecycle of a company or, so to say, the operation we run. That could be a big mistake, that you continue to measure something that is not actually reflecting the business you're doing, the business, from the start in the business case, actually set, is going to be the result of whatever you do.

 

Sometimes those KPIs is never questioned, and I would question almost all of the KPIs that are chosen at least on a quarterly basis. Of course, except the ones that have a reason to be measureable and be measureable over time so you can compare. But certainly there is room for improvements to change your KPIs to cover the right situation and what you actually want to measure.

 

My last question is about processes. How do you follow what you actually decided to do in the previous steps?

 

As we discussed now, let's make sure that we understand that we're now talking about a very complex situation where the supply chain is not easy to illustrate or visualize. And then my tips and tricks is to make sure that the process that you illustrate and share together, so we understand the holistic view, they need to be also spent much more time and not be produced by an engineer or a person that is very detailed in wordings and so on. That needs to be illustrated by photos, pictures, and being very, very pragmatic so the people that work in the flow can actually recognize where am I in this process. What is my function and what is my responsibility?And then you can use big A1s and actually look at them every time there is a review meeting, go back to the process, and actually find out, together with the people in the flow, employees working in the flow, reasons for variances and reasons why we have a problem in a certain area. Do not produce a very nice Power Point with all the process and, yes, live it. Let it live. So that's a very powerful way of making it happen.

 

Thanks, Glenn, for sharing together, and I'm hoping to stay in touch and do future topics in the near future.

 

 

 

About Glenn Rosenholmer

 

 

 

 

 

 

Glenn Rosenholmer

 

Senior Management Consultant

 

LinkedIn Profile

I interviewed Richard Barnett who discussed The Role of AI in Strategic Sourcing.

 

 

 

 

 

 

Great to speak with you today, Richard, and looking forward to this topic on the role of AI in strategic sourcing. Can you first provide a brief background of yourself?

 

You bet, Dustin. I am senior vice president of marketing and customer success for LevaData. I have worked over 20 years in the supply chain solution provider space starting off my career with i2 Technologies in the late '90s, played different roles with supply chain innovators, focused on supply chain planning and optimization, deployment of business networks, particularly in supply chain procurement and logistics, and then more recently with my role at LevaData, where we're really focused on strategic sourcing and procurement.

 

Can we first start by defining what is AI?

 

I think this is an interesting topic. You'll hear AI being used in different contexts related to automation or the threat of AI in terms of this notion of the robots will take over human jobsbecause of the idea of intelligent computers that can replicate, or near, the cognitive abilities of the human brain. The real story, though, that we don't really understand oftentimes that's evolved over time is AI is a discipline is an area that really goes back to the 1960s and efforts in early computing and robotics to replicatepieces of what the human brain does. It could be in terms of sensing, the five senses. It could be in terms of repeating what humanscould do from a manual process perspective in robotics, and it could be in terms of calculating or predictingthe future based on information processing to understand patterns, for example.

 

And today, what we have is a combination of technologies which are broadly put under the AI umbrella, but is best defined as “Narrow AI”, as they are applied in specific contexts.

 

At LevaData, when we think about AI, we really look at more specifically the areas of machine learning, pattern recognition, particularly with respect to new data sources that are now available. So how do you stream and derive intelligence from massive large datasets?But also optimization and predictive technologies implemented at scale with cloud computing or new algorithms that we can apply to specific situations where you're trying to predictcost trends, for example.

 

 

Can you help the audience understand how AI will impact strategic sourcing professionals?

 

It's a great question. What we're seeing is the early period of adoption in a very pragmatic way of AI-based capabilities broadly in supply chain and then within strategic sourcing. Unfortunately, strategic sourcing and direct materials procurement is even further behind the innovation adoption curve. So our focus is on enabling Cognitive Sourcing, our term for describing this intersection of applied AI technologies for the purpose of augmenting the intelligence of supply chain and strategic sourcing professionals to make better decisions. The foundation is based on a three-level framework of first, gathering all of the best information and data sources from within the enterprise combined with market intelligence, with second, identifying the best actionable insights from this constantly updated information to third, optimize decisions and negotiation outcomes. Most companies today are relying on very fragmented data sources that relate to the enterprise history of spend and bill of materials (BOMs) and product information.And trying to marry that up with the very robust but very diverse set of information that's more market intelligence or external to the enterprise and bringing those two worlds together is really the foundation.

 

And then on top of that, we apply different AI technologies, to derive insights around where emerging risks or opportunities are, and it's always on. It is constantly looking and trying to correlate what the impact of, say, a change in demand for a certain product is internally, maybe a change in the forecast for the holiday season. What does that mean for the impact all current areas of spend, the suppliers that are going to be dependent on delivering that increase in volume, and maybe where there additional cost savings? What potential emerging risks because of the capacity change in the market?

 

So we filter those insights into what we call risks and opportunities. And then we have an intelligent agent called Leva, which is a combination of both intelligent assistance as well as AI cognitive sourcing technology that deliver recommendations to professionals are what the most important risk and opportunities are to act upon, what negotiation levers might be useful to use, in what sequence, and at what time to negotiate for either better price or reduced risk with each supplier.

 

And then it learns over time based on those iterations of moves that companies make to constantly improve and get better.This includes the accuracy of predicting costs or risk changes or the combination of negotiation levers that are used to produce a cost savings— not just across an individual customer, but actually across the community of all LevaData users and customers. So it's an interesting combination of looking at predictive optimization models, chatbot-based intelligent assistance, in addition to machine learning and crowd-sourced intelligence.

 

So those are the set of AI technologies that we believe are the fundamentals of what we call this new area of Cognitive Sourcing.

 

Can you explain the cognitive sourcing a little bit more? And also, you mentioned earlier that you have a recent study that you did.

 

You bet. I think at a high level, it's really a shift from interacting with the market maybe with annual or quarterly major sourcing events where companies have traditionally not really changed their process or their strategy in these areas for 15 to 20 years, really. One of the challenges a lot of these companies have today is that they can't act upon the entire long-tail of the spending that they're managing. They've got a complex set of suppliers or categories or sub-commodities of spend. They have a hard time actually covering, say, 10,000 suppliers in all the spend categories. They can't scale out across the opportunity.

 

The second problem is that they're not oftentimes very proactive around predicting changes that might occur in the market and acting ahead of their competitors. So they're falling in the same cycle where there is maybe a big supply constraint that's occurring in memory or recently in electronics resistors, for example, which is not individual piece-part price for resistors. It's very, very low. It's sometimes less than 0.01 cent. But if they buy a billion of them, it's really meaningful at volume and scale. The approach with cognitive sourcing is to — I call it — flipping the classroom. It's giving all the information that you need in a filtered, in-context way to a sourcing professional so that they can actually act in the market in what we call more of a continuous sourcing cycle.

 

So instead of actually only going to the market once a year or once a quarter with information that may be two or three months old, what if you had the capability that was supporting you with recommendations, giving you insights. Then the net result is that you're scaling and looking more comprehensively across most aspects of your inbound supply chain, including costs and risks, and then, more importantly, you're able to take action proactively to avoid risks and challenges in the market, particularly in markets that are very competitive. That becomes a competitive advantage for these companies.

 

So we did a study that we are just about the complete the final published version of it, but we launched last week at the first Cognitive SourcingSummit in Palo Alto. The results of the study were pretty interesting because on one hand, 93% of the survey respondents said that they want a data-driven capability in their procurement organization, and they're very interested in AI to sense these risks and opportunities or to improve negotiations. But only 52% believe that the talent on their teams are actually ready to leverage and use this information and ready for a digital transformation, in short.

 

We also found that 48% really want a market-intelligent system that combines information from multiple sources and presents recommendations. But a surprisingly 38% said that they don't need market intelligence; they get what they need from their supplier directly, which is very interesting because it sort of indicates this kind of schism in the market where companies are, maybe on the one hand, comfortable with the relationships that they have with their suppliers where they're asking their suppliers to give them the information that they need.

 

And when we discussed this survey during the conference last week, Angel Mendez, who was one of the guest speakers, said in the sourcing profession, it's like they're “bringing a knife to a gun fight” because of the investment, sophistication of the supplier side or the seller side of the dynamic has increasingly gotten more sophisticated. They're seeing all the market information, and they're going into these negotiations much better armed than the actual buyers are, particularly in strategic sourcing and procurement of direct material sourcing teams in large global manufacturers.

 

And so the idea is to level the playing field and not rely on the supplier information but actually provide new sources information and insight.

 

The other aspect of the survey that was pretty interesting is that we looked at the RFQ process, particularly around direct material sourcing. What we found was that only 56% of all suppliers are actively engaged annually out of 100% of the total supply base. And they're using, oftentimes, 55% email and spreadsheets or custom development tools to manage that RFQ process.

 

We also found that the average performance from the RFQ cycle time is 14 days in preparation and 26 days in negotiation, taking a little bit over 40 days to complete a cycle. But we found some best-in-class companies that are operating on one day of preparation, two days of negotiation, and three days total cycle time.

 

So our observation is that that is a massive opportunity for competitive advantage for companies to actually change and look at their model very strategically around how they're engaging with their supply base and use these cognitive technologies to get them to a best-in-class performance. And you can just kind of think about it in terms of how two major competitors might be working in the market. The one that's actually able to work in days versus weeks and months is going to win, particularly in these markets in high-tech and consumer electronics that are fast-moving product lifecycles, very tight margins and price curves that change in a matter of months. That becomes pretty mission-critical to look at these areas and a new source of innovation.

 

But the big takeaway we had at the conference was everyone agreed that this area has just not received the right investment in innovation and support that maybe other aspects of supply chain or other groups and departments within these companies have experienced.  My point of view is that I think we should really look at this area and really prioritize it look for innovation and really advocate for a conversation to explore the art of the possible because the technologies and the capabilities are just landing now. And they're potentially highly disruptive for early adopters who really kind of take this as part of their key strategy. So that's what's pretty exciting about this space.

 

Thanks, Richard, for sharing today, and I look forward to staying in touch if you want to continue discussions on this topic.

 

 

About Richard Barnett

 

 

 

 

 

Richard Barnett

 

SVP Marketing and Customer Success

 

LinkedIn Profile

I interviewed Niels Van Hove who discussed Why Mental Toughness Matters for S&OP and Supply Chain.

 

 

 

 

 

 

It's great to speak with you again, Niels. I'm looking forward to hearing your views today on why mental toughness matters for S&Op and supply chain. Can you first provide a brief of yourself?

 

Yes, of course, Dustin.Thanks for having me back. I have 20 years of supply chain experience. I’ve worked in different industries and countries. It was all in management positions as a consultant. I'm an author of the blog Supply Chain Trends as well, which focuses on supply chain and behaviors and mindset, and I've published some articles in renowned magazines like Foresight and Journal of Business of Forecasting. I'm also an accredited mental toughness coach and founder of Mental Toughness Online. So that's where I explore mental toughness in supply chain.

 

Great. Can you first define what is mental toughness?

 

It's a personality trait, or characteristic, which determines, in large part, how individuals perform when they're exposed to stress, pressure, and challenge. So it's really... And people, the mentally tough, can deal with situations better than the people that are mentally sensitive.

 

It has a genetic component as well. We know it can increase or decrease, or it's developable, and it's very significant. And in terms of the origins, it goes back to the elite sports. 30 years ago, Jim Loehr, an American performance psychologist, realized it was an essential quality in the mind of winners. But over the last 10 years, Professor Peter Clough, which is a psychologist from the UK, really took the concept further, and it's now accessible, not only for elite sport, but practically for every walk of life and also in business.

 

And Peter Clough defined the four C's of mental toughness, which is...Control — you really believe you can do something; Commitment — you promise to do it. You set a goal. You make it happen. It is Challenge — you take a challenge, and you're driven to do it.And it's Confidence. You have the inner strength and belief you can do it.

 

So those four C's. They make up the definition of mental toughness.

 

Why is it important for supply chain and S&OP?

 

Well, if we first just go from a people perspective, actually, for mentally tough, they're healthier. So it's better for your wellbeing. They actually sleep better. They show less anxiety and stress. There is a strong correlation with emotional intelligence as well. The mentally tough, they perform up to 25% better as well. And that also comes back to team performance, where mentally tough teams are more open for challenge and also make better decisions under pressures.

 

We know supply chain. We live in this VUCA world— volatile, uncertain and complex world — and we see increased pressure and stress all around us in supply chain —shortened life cycles, increasing competition, increased customers requirements, and change is the only constant. And the mentally tough are open for that change and ready for new challenges and perform better in these environments.

 

And from an S&OP perspective, I actually did some research myself in my S&Op [inaudible 0:03:48] check. It shows that participants who joined my survey, they score a higher effectiveness of S&OP, almost double, where they see attributes of mental toughness in their environments versus participants who don't see that. So in terms of...I've seen some data that shows S&OP is more effective in a mentally tough environment.

 

How can it be developed?

 

It can be developed. We know that, and it's proven. And Professor Peter Clough actually made a questionnaire, which is called the MTQ48. These are 48 questions which actually measure your mental toughness across those four C's. And often it's the first rating that awareness. So if you take this survey, it's about understanding how you think, actually. Mental toughness really describes how you think about your environment, about yourself. Once you have this awareness, you can start working to improve yourself, and it can be with self-help. There's self-help guides out there, and I wrote one myself as well. But you can also get a coach to improve certain attributes of your mental toughness. And it's often about changing the way you think about yourself and the world. Positive psychology plays a role there. But it's small intervention and changing small habits, which can, if you sum them up, have a big impact.

 

Do you have any final recommendations?

 

Yeah. From a business perspective, I really think that improving mindset and mental toughness should be on every CEO's agenda. There's a lot of research out there that it improves wellbeing and performance of employees. They make better decisions under pressure. They deal better with pressure and the challenges of this day and age. It's also my mission to get it on the agenda of CEO's. I look specifically to supply chain, S&Op. I've looked at some data that sort of suggests that it improves performance in those areas as well. So I think, together, it's enough reason for CEOs and executives to start embracing mental toughness and improvement of the mindset in their organization.

 

Thanks, Niels, for sharing today. And I look forward to staying in touch if you want to have another discussion in the future.

 

Yeah. Thanks. It was a pleasure, Dustin.

 

 

About Niels Van Hove

 

 

 

 

 

Niels Van Hove

 

Coach | Consultant | Author

 

LinkedIn Profile